Jim Cramer: Almost Everything, Every Sector, In this Market Is Controversial

 | Mar 19, 2018 | 3:47 PM EDT
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If you don't have a computer screen, if you don't have your stocks on your iPhone, if you don't check closing prices, today I say, good because the desire to panic is palpable.

That said, on day like today, let's not mince words, once again I return to the concept of controversy. Almost everything, every sector, in this market is controversial.

Before I reveal the controversies that are bedeviling this market by industry group let me say that given that the market is still very elevated versus a year ago, it is perfectly legit to have a couple of percentage selloffs or more. We were up more than a percent for the S&P so far for the month even though we've been down five times in six sessions. Still, it's reasonable to give that up March gain. It's rational that we have some selling because in many ways it's been too easy for too many sectors. When things are this controversial you aren't going to find people willing to step up to the plate. You are going to see people walk away from it entirely and that's what we got today.

Now let me go over the groups so you know exactly what I mean and what you are up against.

Let's start with information technology because that represents more than a quarter of the S&P 500, itself risky news because, while a solid group with genuine leaders, it is prone to swoons, some troublesome others more axiomatic.

We've a whole bunch of tech out there, siloed if you will, and if there are silos today they blew up the graneries.

The first group? Social media led by Facebook (FB) . Social media encompasses a lot of stocks but Facebook, at $500 billion is a silo in itself and its political problems, which have been simmering, went to a boil today when we discovered that data gathered by Facebook had been used in ways you probably didn't want to if you had known when you filled out a seemingly innocuous survey, including potentially helping to elect President Trump. Suffice it to say, as I predicted on "Squawk on the Street" this morning, it was not the day to start a Facebook position. In fact it was a day of soul-searching for Facebook holders because we can't believe that they aren't more sensitive to what the media says about that. You can't just declare that there is no data breach or that you have no responsibility for how your product is used. Today was a day where you put out CEO Mark Zuckerberg or Chief Operating Officer Sheryl Sandberg to say you are sorry and you will work night and day to be sure that it doesn't happen again. The idea that there is no "it" never occurred to most of us but the Facebook people may be too arrogant to know otherwise. When you call something a scandal, they can't say it isn't. Yet they seem oblivious. That's what changed I think they know now as they hired a forensic analyst to get to the bottom of the situation. Not enough, but a start.

Next up, Uber stopped autonomous vehicle tests around the country when one of its cars struck and killed a pedestrian. Now any fatality is too many fatalities but from the very beginning of this experiment most of the people involved expected we would have them, certainly more of them than we had. That said, the number of companies involved in autonomous driving, from Alphabet's (GOOGL) Waymo to Intel (INTC) to Nvidia (NVDA) and Tesla (TSLA) among so many others, was integral to the massive Nasdaq selloff. Remember anything semi, including capital equipment, had been moving up in the last few weeks. That sure ended.

Alphabet was twice hammered when the European Union floated the idea of an internet tax, something that also jabbed Amazon (AMZN) . Hmm, that's a lot of FANG to take out and shoot on one day. Oh and lets not forget that we learned this weekend that Apple (AAPL) might be making its own screens and not the screens of Asian companies like Samsung. Sounds innocuous but the real doubters were out in full force musing that perhaps Apple will make every part. What a nightmare for the entire cottage industry that is being an Apple supplier.

Not all was lost; we didn't get a severe hammering in the cloud based stocks. Look for those to bottom first if we are going to stem this decline.

The financials took it on the chin today in part because we have a Fed meeting this week with a new chair Jerome Powell, and the banks will be the stocks impacted most negatively if Power says that the economy has weakened to the point where maybe we only need three rate hikes. I hope he just says "we will be data dependent" which means no autopilot but it is a reasonable worry.

Of course the opposite could happen, Powell could say the economy's still as hot as the last time he spoke not that long ago. That means higher rates are coming and we get a selloff in health care, higher yielding consumer staples and the real estate investment trusts. A three percent yield won't help you as rates creep higher as anyone who owns the likes of Kraft-Heinz (KHC) , which broke down to just shy of a 4% yield because it has neither growth nor enough income to attract people in this kind of rising rate environment. And word of a Presidential press conference coming up soon on drug prices helped weigh the group down, too.

The good news here? When I strolled through the charts I saw all of the banks were up last week and all of the health cares are down. If we get a statement from the Fed that inflation is under control so we will do a hike and maybe more if things stay strong you could actually catch a rally in both sectors come Thursday. But Thursday's a lifetime away.

We know the industrials are troubled. They are linked with world trade which our tariffs have officially put a crimp in. No CEO wants either a trade war with China, or if you think that we've been getting the stuffings beaten out of us, how about a trade retaliation. The group still can't get its footing. Even the putative winners from the tariffs, good companies like our largest steel maker, Nucor (NUE) , have been ripped to shreds.

Anything oil and natural gas got slammed again even though the oil futures weren't that heavy. I continue to tell you this group has real issues and that include a turn against natural gas and toward renewable energy when it comes to power plants and a growing revulsion by money managers themselves to the cohort.

Consumer discretionary stocks? Just not enough good in retail to counteract the gloom, but if you want to know what could bottom first look to this group. I see green shoots.

Now amid the gloom I have suggested that things could turn around after we get a few days down and we put some distance between the negative news that abounds pretty much everywhere.

It's just that I keep coming back to the controversy issue, not because I want to scare you, heaven knows, there are people who are better than that and more regular at it than I am. I want to do it because the controversies are real, they aren't faux concerns that make this kind of selloff a natural to buy.

That's why I keep saying don't be afraid to sell something, to raise cash to get ready for sellers to dump more stock now that they can't take pain. We told Action Alerts PLUS club members that it isn't too late to sell and we were net sellers of stocks rather than my typical net buying stance on days like today. There's just too much that's wrong to be whistling past anything, let alone the graveyard of tech from all the plots alone the way.

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